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government-trade

government-trade

February 4, 1994

Blockbusters No Blowouts For Yule Sales

NEW YORK -- For the last 20 years, retailers and some of their vendors have relied on blockbusters -- those bargain-priced boxes of beauty products -- as a surefire way of sparking Christmas business. But this past year, the fuse got...

NEW YORK — For the last 20 years, retailers and some of their vendors have relied on blockbusters — those bargain-priced boxes of beauty products — as a surefire way of sparking Christmas business. But this past year, the fuse got damp.

Although the blockbusters appear to have been a virtual sellout — as in years past — it took longer in December to sell through the beauty kits. That was true even for Estee Lauder, which had pioneered the concept in 1971 with the introduction of an eye color collection for $8.50.

In addition, Elizabeth Arden, Lauder’s major competitor in the annual holiday blockbuster wars, was forced to mark down some of its $29.50 kits by $10 to sell out stocks.

This past season, Arden offered two blockbusters — one keyed on its

four-year-old Red Door fragrance, the other featuring the Sunflowers scent that had been launched in the spring.

Arden’s blockbuster business showed a single-digit increase, but it wasn’t easy to achieve, said Mark Loomis, vice president of retail marketing at Arden.

The two kits, which went on counter Nov. 1, were equally priced, with an original price tag of $29.50 with a $15 qualifying purchase, but the Sunflowers version took off “like a rocket ship,” while Red Door sputtered, Loomis said. Both sets had a claimed value of $435.

Unfortunately for Arden, the slower-moving model made up three quarters of the blockbuster assortment.

“If we had to do it over again, we certainly would have done a lot more Sunflowers,” Loomis said.

In prior years, Arden had sold out by Dec. 10. Last season, executives estimated that a sellout would not occur until Christmas, so the company decided to take the markdown, sparking a sell-through by Dec. 18.

“Customers were buying five and 10 of them,” Loomis said. “At Macy’s Herald Square in New York, we went from selling 20 a day to 100 a day.”

The sluggishness appears to have been caused by heightened competition from a proliferation of new or improved promotional vehicles on fragrance bars — more sharply priced gift and value sets and the growing popularity of collections of fragrance miniatures.

No one, however, is suggesting eliminating or even curtailing the Christmas blockbuster. It has become a promotional mainstay that can generate 15 to 20 percent of a brand’s key November and December business. While Lauder executives declined to discuss volume, sources estimate that blockbusters with accompanying qualifying purchases could account for $45 million at retail of the market leader’s holiday volume.

“For us it has been a big business,” Loomis said. “It made November look like December.”

Some retailers have suggested that the product mix — normally consisting of color, treatment and fragrance products — needs some innovative updating.

“We need a new catch — a slightly different assortment to make the customer say, ‘Wow,”‘ said Patty Payne, vice president of cosmetics at the Federated Merchandising division of Federated Department Stores. “I have a suspicion that the customer sees the same assortment every year and she has grown complacent.”

She called on manufacturers to “be creative and take the assortment to the next level with new and unique items and products.”

In addition to Lauder and Arden, blockbusters were also marketed last season by Princess Marcella Borghese and Ultima II.

While noting that the blockbusters attract new customers as well as pump up volume, Payne pointed out, “They all came out of the gate slowly last year but virtually sold through by Christmas.”

While noting that “it would help if prices stopped going up,” Burke pointed out that the consumer has become relentless in demanding better value.

“The time has really come for fresh offerings,” he said. Muriel Gonzalez, executive vice president of marketing at Estee Lauder USA, said the company’s primary blockbuster — a $150 value priced at $32.50 with a qualifying purchase out of the Lauder line — sold through almost entirely by Christmas, which was later than last year.

“We held our dollar volume, but sold through more slowly,” she said.

Last year, Lauder had “spottily” sold out between Dec. 14 and 18.

Although Lauder’s primary blockbuster was more sluggish this year, the company had better luck with newer offerings. One new promotional set, called The Golden Five, offered a small gold-colored atomizer and purse with five fragrances for $20. It was marketed in 60 markets with TV support in 10, and “it sold out quickly,” Gonzalez said.

Lauder also did a more luxurious version of its blockbuster, priced at $45 with a value of $285, for specialty stores such as Neiman Marcus, Saks Fifth Avenue and I. Magnin.

“It sold through 100 percent,” said Gonzalez, “but even that blockbuster didn’t sell out as quickly as we anticipated.”